It looks like the only way is up!

It wasn’t too long ago that the real estate ‘bubble’ was expected to burst – and that was alarmingly forecast more than once.

We know the bubble has definitely not burst. So, what has actually happened?

COVID, interest rates, inflation. They have all been factored into predictions for the real estate market. Apart from a couple of initial flinches, the market has remained, for the most part, resilient to these challenges thrown at it.

Amazingly enough, prices are only -1.4% below their previous peak in January 2022. That year prices took a dip as the first of a string of interest rate rises was announced. Consumer confidence fell sharply and the market all but stalled for some time. In early 2023 however, Sydney’s housing market turned a corner with prices rising steadily month-on-month and have continued to do so to date. Although the pace of growth has slowed more recently, prices are still rising and Sydney dwelling values look to hit a new record in the near future.

This property selling year started with a surge of properties hitting the market in early February. Confidence returned for those concerned about further rate rises and those that held off transacting last year decided to take a leap of faith and make the move. What has been interesting is that buyer demand has remained high, resulting in healthy auction clearance rates and the continuing creep up of prices, specifically 0.3% in March and 9.6% over the past year.

Having said all that, there has been a definite shift in buyer behaviour since the start of the year. Average registration numbers at auction have fallen and bidders are more reluctant to come out of the gates bolting, preferring to hold their cards close to their chest.

But all this hasn’t been enough to quell sale prices.

My take is that the buyers that are turning up to secure property are sure of their intention to buy. Pricing property has been difficult for them in recent months, with some confounding inconsistency in sale prices, but once they see some social proof in the form of other buyers bidding they are confident enough to spend their budget. This happened on Saturday at the auction for 17 Spring Street Birchgrove. A difficult property to price because of its condition versus its position. With an auction price guide of $2,900,000 we had no bids at auction but only a matter of hours later I was able to negotiate a sale price of $3,100,000 with one of the registered bidders.

Overall supply is still below average but the shortage is most noticeable with A-grade and investment-grade properties. With demand remaining high, now is a great time to consider a move.